Editor's Choice, March 2015: Growing Prosperity: Developing Repeatable Models to Scale the Adoption

I was very happy when Caroline Ashley asked me to guest edit the Practitioner Hub for Inclusive Business that agribusiness is the first theme I am involved with. Having spent the first part of my career helping parts of the tea industry in East and Central Africa to get back on its feet following some difficult decades in the 70s and early 80s, and then working on a number of inclusive business initiatives in this sector in recent years, I feel comfortable that I have some sense of what it takes to make these vital markets work better for small farmers. What it takes, at heart, is an understanding of how these farmers make decisions and manage risk, which I found reflected well in this month's Editor's Choice 'Growing Prosperity: Developing Repeatable Models to Scale the Adoption' produced by Acumen and Bain. Caroline has already drawn attention to this report in the Hub Agribusiness network, but I have some reflections of my own to add.

A great strength of the report for me is that it is based on both company cases studies and interviews with over 300 smallholder farmers in East Africa and India.

The case studies add real value, and on a personal basis it is nice to see Juhudi Kilimo being featured, a company that has provided a great blog for this month on the Hub. The case studies and interviews are for a very specific purpose, as the writers say:

‘Our principal aim is not to provide new research on farmers themselves, given that there is already a wealth of research on this topic. Instead, we are focusing more specifically on ways of interpreting farmer behavior that are most useful for pioneer firms’ decision making.’

While the report is about how these firms make decisions, it is equally about adoption of new techniques and technologies by farmers themselves. This includes wider issues driving decision making, such as aspiration. This rings true to me as a basis for how successful pioneer firms should, and do, behave.

The focus on what the report refers to as ‘pioneering firms’ and how they are innovating also feels right. A common reaction I have had when working with such firms within a donor programme is that companies can’t be innovating because the techniques and technologies on which their products and services are based, which go back to the green revolution, are so well-known and indeed common place. However, the reality is that this is extremely context specific, and there are many contexts where there is a huge gap between what is possible and what is currently happening, as BIF case studies also demonstrate. The ‘Growing Prosperity’ report cites research that with simple techniques, a yield increase of up to 67% is possible (in this case drip irrigation, fertilizer and high yielding seed).

Other challenges within agribusiness rightly mentioned are high risk from weather, disease and the large numbers of remote farmers that are hard to reach.

The report focuses on innovating firms rather than the wider environment, believing that the innovations that they make can then be used to drive adoption by others. Other actors in the market can then react to that. In a later section of the report they do try and pull out some themes using a market system perspective, but for me the report is most useful when it sticks to the focus of the relationship between pioneer firms and their smallholder farmer customers.

As we found in our report on the BIF pilot, The 4Ps of Inclusive Business, it takes time and a lot of patience for companies to build successful business models.

The core of the report is the awareness, advantage, affordability, access framework. As the writers explain this is not in itself new, but they give many useful examples of how it applies to pioneer companies building business models that serve small farmers.

The report unpacks each element of the framework giving examples and tips from the case studies. Understanding farmers as customers comes across very strongly, I won’t attempt to summarise this here, but what I found interesting included, in the section on awareness, the insight into trust building as key. This is also what I found when looking at the BCtA portfolio of agribusiness initiatives and is a particularly interesting feature of the BASF India initiative about which we have just published a new interview.

The report writers suggest that ‘This trust-building prerequisite is the reason why selling to this segment is so time intensive and, hence, costly. Marketing new products and services requires high engagement with geographically dispersed farmer customers, thereby calling for both focus and patience from the company and its backers.’

I think this is a very important point, as is their suggestion of the need to focus on early adopters among farmers.

In the section on advantage I like the diversity of issues covered, including the need to look at the whole value chain when assessing the way that farmers may need support to benefit from adopting a new product or service.

With affordability, the focus on both technical innovation to remove cost, but also making the whole business model economic for both customer and firm, is very useful.

The report then discusses how to achieve what they refer to as ‘good scale’, suggesting that

‘In addition to a solid understanding and application of the Four A’s, a firm must also have a Repeatable Model with the right strategies, processes, teams and supporting systems if it is to be able to handle the challenge of scaling to serve hundreds of thousands or millions of farmer. They contrast this examples of ‘bad scale’ where they identify where a model has become too complex and the essence of how the business model was successful have been lost. This is a great section of the report, and rightly the feature item in their report title.

The rest of the report is there, I feel, for completeness but not for insight. As the writers note more than once, linking these insights to market system level issues is really beyond the scope of this report. The final section, for example, simply notes some of the bigger issues that are impinging such as demographic change and climate and adaptation.

If I was left with one answered question from the report it would be how a company with one product or service can help farmers who are grappling with so many interlinked issues. In a blog from global fertilizer firm Yara, William expresses this very simply as: ‘Farmers don’t need just one thing, they need many’. In the example I quoted above, the huge yield increase is because of irrigation PLUS fertiliser PLUS seed, and probably this also means that some kind of credit is needed too? The companies providing the case examples have all dealt with this in different ways, but I was not convinced that this is covered by the 4As. Nonetheless this is a very useful and insightful report which fully deserves to be this month’s Editors Choice.

To read previous month's Editor Choice blogs CLICK HERE